Paramount threatens to leave California as $110 billion Warner Bros deal faces antitrust trial

Relocation threat

Paramount Skydance CEO David Ellison has warned that the studio could begin relocating out of California on October 1, a five-year plan approved by the Paramount board that would move most film and TV jobs to another state. Tennessee, Georgia, and Texas are under consideration, according to reports by Puck and Bloomberg citing informed sources. Should the Warner Bros acquisition succeed, a studio lot in Hollywood could also be sold. Paramount is the only remaining large film studio still located in the Hollywood neighborhood, on Melrose Avenue. The threat responds to the antitrust lawsuit led by California Attorney General Rob Bonta, whose coalition of 12 states is suing to block Paramount's $110 billion acquisition of Warner Bros Discovery. Some sources cite the deal at approximately $111 billion.

California calls it blackmail

Bonta accused Paramount of extortion, writing on X that the studio was attempting to blackmail the state into letting an illegal deal through.

In a span of weeks, Paramount agreed to halt the merger until a court decision or until June 2027, asked for a November trial, and is now back with another attempt to blackmail the state into letting an illegal deal through. Paramount has lost the plot as it continues to lose in court. It didn't work the first time -- on the eve of our July lawsuit -- and it won't work this time.

The Writers Guild of America, also suing to block the merger, condemned the relocation plan in a statement to Variety.

By threatening to leave the state because it doesn't want the government to enforce the law, Paramount further proves the danger of its outsized power over the industry and what that will mean for writers and the creative community. This type of behavior is precisely why the merger should be blocked.

The ticking clock

The antitrust trial is set for March 2, 2027. Starting October 1, Paramount must pay Warner Bros shareholders approximately $7 million per day, or about $650 million per quarter, in ticking fees if the deal has not closed. The per-share consideration rises by 25 cents every 90 days. US press estimates cited by Corriere della Sera put the ticking fees at roughly $1.2 billion by the trial's conclusion in March. The Los Angeles Times estimates a more prolonged delay could push total ticking fees to about $2.1 billion. Paramount has also pegged additional bridge financing costs at $190 million.

The deal deadline is June 4, 2027. If it passes without completion, Warner Bros can walk away and collect a $7 billion termination fee. Paramount also absorbed $2.8 billion in termination fees Warner owed Netflix to dissolve a prior agreement. The Ellison family committed $46.72 billion in equity to finance the acquisition, which values Warner Bros at approximately $81 billion in equity and $110 billion in enterprise value including debt.

The CNN question

Paramount chief legal officer Makan Delrahim, speaking at Politico's California Agenda conference on Tuesday, said all options including a possible sale of CNN were "on the table" to resolve the California suit. Ellison argued in a New York Times op-ed that opposition stems not from industry consolidation but from his potential control over CNN. Ellison, son of Oracle founder Larry Ellison and a friend of President Donald Trump, has faced accusations that CNN could face editorial changes similar to those at CBS News, where Bari Weiss was installed and journalists departed, including from the flagship program "60 Minutes." Ellison has denied plans to change CNN's editorial direction and told analysts that financing for the deal is fully in place.

The merger has received approval from the UK, the European Union, and the US Justice Department. The 12-state coalition argues the transaction violates the Clayton Act by diminishing competition in three markets: wide-release theatrical distribution, "top-grossing" theatrical distribution, and basic cable licensing.